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Selecting a Sound Sourcing Location Amid a World of Change

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by Dinesh Goel

As service delivery destinations have become increasingly globalized over the years, selecting the optimal location for a sourcing engagement has become a more and more complex process. While the number of possible locations has grown dramatically, each destination is also busy self-promoting, creating a competitive atmosphere that further magnifies the difficulty of your decision.

What might appear to be a relatively straightforward choice based on general awareness of popular countries and cities, selection is — in reality — a much more nuanced process that requires ever-more-careful consideration.

Here are the TPI Top 5 considerations for selecting your next sourcing location:

  1. Risk. Amid ever-increasing economic and geopolitical uncertainty, risk assessment is critical in selecting an outsourcing location that ensures business continuity. Thorough risk assessment requires an objective, detailed review of the economic, political, civic, and natural calamity-related characteristics of each location.
  2. Human capital. The availability of the talent pool in a specific location will determine the scalability of your sourcing operation over time. Deep insight into the suitability of offshore service delivery potential, the level of training required, and the demand-supply balance in terms of density of offshore employment will help you make the best decision.
  3. Infrastructure. Infrastructure can play spoilsport when ensuring a robust, secure, scalable and dependable operation. Determining the state of the current physical and technology/telecom infrastructure, the historic level of investment in infrastructure and a realistic sense of projected investments are all vital to your final destination decision.
  4. Maturity. Understanding a specific location in the context of the entire offshore service delivery industry will help you assess and define its current maturity level. It’s important to gauge the industry as it has developed over time: how it has progressed over the past five years, its relative current state, and its likely future state. In some countries, such as India, domestic sourcing is growing rapidly in some delivery locations that were traditionally considered “offshore,” further adding to the maturity and complexity consideration of your location decision.
  5. Cost. Last, but not least, in establishing the business case for your location selection, take into account the delivery cost per full time equivalent (FTE) or per transaction. Given the rapidly changing dynamics of various locations around the world, it is essential to understand the “go forward” view of your overall cost. Wherever you ultimately elect to go, you don’t want to revisit that decision in the near future.

The global service delivery experts at TPI are experienced in helping clients assess their global sourcing needs and select the optimal location(s) to pursue. For more information on selecting your outsourcing location or any other global service delivery question, contact Dinesh Goel, Partner, TPI, at dinesh.goel@tpi.net or +91 98458 93787.

About the author

Dinesh is a highly experienced and well-respected advisor in the outsourcing industry with more than 23 years of experience in management consulting and outsourcing. He works with enterprises to craft sourcing strategies, structure and negotiate complex sourcing transactions and design and implement sourcing governance organizations. Prior to joining ISG, Dinesh worked with Infosys and Accenture, where he led large transition programs and consulted on IT strategy and implementations, business process-reengineering and operational improvement programs. He is a published thought leader and a regular speaker at industry conferences. Dinesh manages the ISG India Business.